The Devil's Casino: Friendship, Betrayal, and theHigh-Stakes Games Played Inside Lehman Brothers - Softcover

Ward, Vicky

Softcover

ISBN 10: 111801149X ISBN 13: 9781118011492

Publisher: Wiley, 2011

Synopsis

The inside story of what really happened at Lehman Brothers and why it failed

In The Devil's Casino: Friendship, Betrayal, and the High Stakes Games Played Inside Lehman Brothers, investigative writer and Vanity Fair contributing editor Vicky Ward takes readers inside Lehman's highly charged offices. What Ward uncovers is a much bigger story than Lehman losing at the risky game of collateralized debt obligations, swaps, and leverage.

A can't put it down page turner that opens the world of Wall Street to view unlike any book since Bonfire of the Vanities, except that The Devil's Casino isn't fiction.

• Details what went on behind-the-scenes the weekend Lehman Brothers failed, as well as inside Lehman during the twenty years preceding it
• Describes the feudal culture that proved both Lehman's strength and its Achilles' heel
• Written by Vicky Ward, one of today's most connected business and finance writers

On Wall Street, Lehman Brothers was cheekily known as "the cat with nine lives." But as The Devil's Casino documents, this cat pushed its luck too far and died?the victim of men and women blinded by arrogance.

About this title

Review:

They were the Rat Pack of Wall Street. Four close friends: one a decorated war hero, one an emotional hippie, and two regular guys with big hearts, big dreams, and noble aims. They were going to get rich on Wall Street. They were going to prove that men like them ? with zero financial training - could more than equal the Ivy-League-educated white shoe bankers who were the competition. They were going to create an institution for men like them -- men who were hungry and untrained ? and they were going to win, but not at the cost of their souls.

In short, they were going to be the good guys of finance.

Under their watch, Lehman Brothers started to grow and became independent again in 1994. But something had gone wrong on the journey. The men slowly, perhaps inevitably, changed. As Lehman Brothers grew, so too did the cracks in and among the men who had rebuilt it.

Ward takes you inside Lehman's highly charged offices. You'll meet beloved leaders who were erased from the corporate history books, but who could have taken the firm in a very different direction had they not fallen victim to infighting and their own weaknesses. You will encounter an unlikely and almost unknown Marcus Brutus, who may have had more to do with Lehman?s failings than anyone?including Dick Fuld, who has widely been considered the poster-child for the mistakes and greed of all bankers.

What Ward uncovers is that Lehman may have lost at the risky games of collateralized debt obligations, swaps, and leverage but that was just the end of a bigger story. "Little Lehman" was the Wall Street shop known to be forever fighting for its life and somehow succeeding. On Wall Street it was cheekily known as "the cat with nine lives." But this cat pushed its luck too far -- and died, the victim of men and women blinded by arrogance. Come inside The Devil's Casino and see how good men lose their way, and see how a firm that rose with the glory and bravado of Icarus fell burning in flames not so much from a sun, but from a match lit from within.

Amazon Exclusive: Q&A with Author Vicky Ward

The Devil’s Casino traces the history of the players and the company in a way that makes the fall of Lehman seem inevitable. Would you agree with that statement and why or why not?
Yes I would. I don’t think that the way Lehman was run was sustainable in the long-term. You cannot run a major securities firm without tolerating dissent or change at the top. Lehman’s “one firm” culture that made it so great when it was a tiny sub-division of a much larger entity became its nemesis when it was a stand-alone investment bank. Anyone who disagreed with Dick Fuld, or more importantly, the firm’s day-to-day manager Joe Gregory was either fired or quit. That is not the way Goldman Sachs is run, nor JP Morgan Chase. In those houses the CEOs seek out all sorts of different views in their senior executives. At Lehman anyone who argued about risk management was shoved aside. Eventually that position is not tenable.

Discuss some of the people you were able to talk to throughout the writing process. Do you have a favorite interview or experience during the process?
Well, I loved talking to Peter A. Cohen because he’s famous (to readers of Barbarians at the Gate) as being one of the most terrifying cigar-chomping bankers on The Street but I found him rather charming. He still carries his cigar. He just doesn’t smoke it anymore!

I also really enjoyed meeting Bob Steel, the former Treasury Undersecretary. I found him to be a very thoughtful judge of character who had a very large perspective not just on Wall Street but on the world. Hank Paulson too was really terrific. Very blunt, and actually very, very funny! When he told me that he used to tell Goldman Sachs bankers “listen, everyone hates you except your mother – and if you are lucky – your wife” it was hilarious! He was making the point that bankers become their own worst enemies if they are ostentatious – which he most certainly is not.

Some of the best interviews were off the record so I cannot say who they were with but I talked to some people so often that I felt my life would be dramatically different once the book was over: it would be very odd not to talk to them all the time.

I also did love Karin and Bradley Jack. Karin Jack has got to have the funniest sense of humor in a Wall Street wife I’ve ever heard – and I loved the fact that her ex-husband actually backed up everything she said (which was essentially how grim it was to be a Lehman wife!). They were a terrific pair.

And then there were just some fabulous people who really saw things straight and put me straight. John Cecil, Lehman’s former CFO, was painstakingly patient with me. I really owe him. And Tom Hill, the vice-chairman of Blackstone was a man I came to greatly admire. Even though Dick Fuld had shafted him back in 1993, he had a lot of sympathy for the Lehman people and I think really felt the tragedy of the firm’s collapse.

Share with us one of your key takeaways from your experience writing The Devil’s Casino.
Weirdly, that not all bankers are bad and that there are many shades of grey on Wall Street; it isn’t black and white. I think there was a lot of good and bravery in some of the protagonists of the book, and not all of them chose to take the Machiavellian path to ultimate power and riches, no matter what the risk or cost. Tom Tucker is an unsung hero: the former head of sales, who grew horrified at what they’d all turned into and gave back his bonus and set up a non-profit foundation for underprivileged children. Dick Fuld, too, actually was a very moral man, whose mistakes, I think were more unintentional, than intentional for the most part. This doesn’t excuse him. It just makes the story more interesting.

What are the implications for the future, post-Lehman and post-crash?
Well, to be honest, not good. I think the book is really a kind of morality-tale. It shows us how the best intentions go astray and how the will to acquire, to succeed, is in the end a force of human nature and is rarely tempered and overcome. I think the book shows that no matter what the “rules” or “regulations” are on the Street, clever or hungry bankers have always historically found a way around them. So I think that we will see history repeated – probably not tomorrow. But eventually – yes. Doesn’t history always get repeated? Isn’t that the irony of humanity?

From the Inside Flap:

They were the Rat Pack of Wall Street. Four close friends: one a decorated war hero, one an emotional hippie, and two regular guys with big hearts, big dreams, and noble aims. They were going to get rich and prove that men like them—with zero financial training—could more than equal the Ivy League-educated, white-shoe bankers who were the competition. They were going to create an institution for others like them—hungry outsiders—and they were going to win, but not at the cost of their souls.

In short, they were going to be the good guys of finance.

These four men were determined to rebuild the broken brand of Lehman Brothers, America's oldest partnership, which had imploded in 1984 and was consumed by American Express and Shearson. For a decade or so, they drove into the office from the same middle-class town in Long Island at 4 a.m. They became known as the Huntington Mafia and the Ponderosa Boys.

At first, their unity and their grit were undefeatable. The men atop American Express and Shearson—supposedly their bosses—found they were no match for the defiant team spirit that confronted them in Lehman Commercial Paper Inc., which, in 1990, became known simply as Lehman.

Under their watch, Lehman Brothers started to grow and became independent again in 1994. But, along the way, something went wrong. The men slowly, perhaps inevitably, changed. As Lehman Brothers grew, so too did the cracks in and among the men who had rebuilt it. Until it all came undone on September 15, 2008.

Investigative writer and Vanity Fair contributing editor Vicky Ward takes you inside Lehman's highly charged offices. You’ll meet beloved leaders who were erased from the corporate history books, but who could have taken the firm in a very different direction had they not fallen victim to infighting and their own weaknesses. You will encounter an unlikely and almost unknown Marcus Brutus, who may have had more to do with Lehman’s failings than anyone—including Dick Fuld, considered by many to be the poster child for the mistakes and greed of all bankers.

What Ward uncovers is that Lehman may have lost at the risky games of collateralized debt obligations, swaps, and leverage, but that was simply the tail end of a much bigger story. "Little Lehman" was the shop known to be forever fighting for its life and somehow succeeding. On Wall Street, it was cheekily known as "the cat with nine lives." But this cat pushed its luck too far and died—the victim of men and women blinded by arrogance.

Come inside The Devil's Casino and see how good men lose their way, and see how a firm that rose with the glory and bravado of Icarus fell burning in flames—not so much from the sun, but from a match lit from within.

About this edition

• Publisher: Wiley
• Publication date: 2011
• ISBN 10: 111801149X
• ISBN 13: 9781118011492
• Binding: Paperback
• Edition number: 1
• Number of pages: 296